1. WHAT ARE THE PRIMARY CAUSES OF TOYOTA’S RECALL PROBLEM? The primary cause of Toyota’s recall was outsourcing their pedal manufacturing and assembly. To this day Toyota has recalled an estimated 2.3 million cars in the U.S. affected by the accelerator assembly problem, 4.2 million vehicles to fix the floor mat issue and out of all those vehicles 1.7 million of them were involved in both recalls (Linebaugh & Shirouzu, 2010). Amongst them are the 2008-2010 Sequoia sport utility vehicles.
The main recall problem with the Sequoia’s is the accelerator pedal inside the pedal sensor. What happens over time is that the break lever rubs against the surface of the accelerator and overtime the surfaces may begin to stick. In the event that they do stick the pedals become slower to return to their original state or in some rare cases stick together leaving the throttle open and increasing the risk of a crash.
The reasons for the pedals sticking vary from: materials used wear and tear and environmental conditions (Pedal Recall, 2010) According to Toyota they have identified the problem and have come up with a simple solution, they are doing everything they can to resolve the issue as quickly and convenient as possible in hopes of repairing the company image.
2. WERE THESE THE RESULT OF OUTSOURCING?
“The whole problem started with the outsourcing of the pedal and the pedal assembly,” said Vito Polera, fleet manager at Toronto’s Northwest Toyota dealership. “When Denso couldn’t meet the demand, Toyota farmed out to CTS, which is the affected part” (Deveau, 2010).
The pedals in question were manufactured by CTS Corp., a company that Toyota had to turn to when one of their primary tier one suppliers could not keep up with the demand. Yes this recall was a direct result of outsourcing, but other factors played a huge part. CTS stated that the accelerator pedals were manufacturer based on Toyota’s specific design specifications (Hannon, 2009). CTS has a large product list and do not specialize in the auto industry. The auto section of their business is a total of 30% of their revenue and Toyota is 3% of their sales (Healey, 2010).
Toyota failed to set standards on what grade of materials were to be used to manufacture the pedals and CTS failed to test the pedals appropriately before they were sent out. If Toyota would have been involved with the material selection and testing, this recall may have been avoided. In a recent press statement Toyota stated that they have been working closely with their pedal supplier CTS on a revised design that effectively remedies the problem. The new pedals are now being produced at CTS to support Toyota’s demands. They also stated that they will continue to work with CTS to test effective pedal modifications for existing vehicles on the road and will make any replacements to those vehicles as needed (Dodge, 2010).
3. DRAW THE SPECIFIC TOYOTA SUPPLY CHAIN STRUCTURE FOR YOUR SPECIFIC RECALL PROBLEM.
For the 2008-2010 Sequoia models there is one direct tier 1 supplier to this problem and that would be CTS Corp. CTS is located in Elkhart, Indian U.S.A.. Below you will find a sample of Toyota’s SCM based only the accelerator pedal for its Sequoia’s. After the parts are taken from CTS to Toyota Motor Manufacturing in Alabama (TMMAL), where Toyota manufactures their V8 engines for their Sequoia’s (TMMAL, 2010), they are assembled there and are taken to warehouses to be distributed to different dealerships and then sold to customers.
4. WHAT ACTIONS HAVE BEEN TAKEN BY TOYOTA TO ADDRESS THE RECALL PROBLEMS?
Toyota has taken many steps to address this recall, after figuring out that the problem was with the pedal manufacturing, Toyota engineers have thoroughly tested the pedals and have come up with a very effective and simple solution to the recall. They have concluded that a “precision-cut steel reinforcement bar” (Consumer FAQ, 2010) needs to be installed on the pedal for it to eliminate any unnecessary friction that is causing the pedals to stick. Toyota is ensuring that the installation of the steel reinforcement bar is a permanent fix and will eliminate the tension between the two surfaces and the pedals will no longer stick.
Toyota has also done the following to reach their customers and take care of the recall issue:
1. They have mailed letters to all owners of vehicles involved in the recall. The letter contains specific instructions on what to do to get their vehicles fixed. 2. Many Toyota dealerships have extended their service hours in order to meet the needs of the consumers. 3. Within those dealerships they are working to improve customer relations by expediting repairs, offering free car washes, oil changes and follow up maintenance service.
4. In order to support its dealerships Toyota has provided financial help to cover any additional costs related to the recalls. All with the end consumer in mind. They want their customers to be able to resolve the issue as quickly and conveniently as possible. 5. Toyota has put together informational videos, campaigns and press releases describing the problem and advising their customers of the risks associated with the recall and advising them of quick a solution. 6. They are working closely with CTS on future manufacturing processes to avoid any additional problems.
5. DO YOU THINK THE ACTIONS TAKEN BY TOYOTA ARE THE RIGHT ACTIONS? EXPLAIN WHY OR WHY NOT IN DETAIL.
Overall, yes I think Toyota is handling the problem to the best of their ability and capacity. They are taking full responsibility of the problem. They have addressed the issues and are guaranteeing that their simple fix to their poor design is a permanent fix. They are working with CTS to improve the design and future manufacturing practices for their parts.
They are supporting their dealerships, doing what they can to keep the customers involved and informed of new findings. They are putting their customers first. I do think their efforts are limited; they can only fix so many cars at a time, I believe Toyota will be more selective on who they choose to manufacture their parts from now on. Like the old saying says “you live you learn” Toyota was focused on becoming the number one automaker in the world and once it obtained the title it may have forgotten
why they became the number one automaker in the world, which was quality. In my opinion they are handling the problem with class and integrity. Once you fall all you can do is get up and keep walking and that is exactly what Toyota is doing. This recall only affected 8 of their Toyota models, not any others or other lines such as their Lexus brand or their scion. Therefore, despite the cost of this recall, Toyota still has a business to run.
6. WHAT ARE THE PRIMARY PRESSURES PLACED ON FIRMS WITH GLOBAL SUPPLY CHAINS THAT ARE FORCING THEM TO USE MORE OUTSOURCING?
The primary pressures placed on supply chains are prices and competition. All outsourcing directly correlates to the bottom price. Outsourcing has become a competitive strategy. Thanks to the internet, consumers now have a global market at their fingertips. Companies need to be able to adapt and focus on greater products and services at the lowest costs in order to stay competitive. Companies like Toyota are focusing on their core competencies and outsourcing parts that can be made better by other companies for a fraction of the cost is one of their competitive advantages.
In this case, Toyota has no choice but to outsource the parts that are needed to, to be able to put their vehicles together. Toyota is in the business of selling cars, not manufacturing the parts to make them, and many companies out there are using outsourcing for their advantage.
One of Toyota’s main philosophies includes producing vehicles where the customers are and buying the parts to make the vehicles close to where they are being produced (Hannon, 2009). In a global market place there are no boundaries, products being manufactured in certain countries may have all parts being made elsewhere. In order to stay competitive in this market organizations have to be able to use all their resources effectively. Today’s organizations have to be ready to change with consumer demands and be able to change with the global market.
7. EXPLAIN HOW ACCOUNTABILTY CAN BE BETTER MANAGED IN LONG, GLOBAL SUPPLY CHAINS.
Accountability can he hard to manage especially when manufacturing is involved, but just like consumers can go back to where they bought their car, the car manufacturer should be able to go back to where they got the parts to make the car. One of the ways accountability can be better managed would be cross-functioning. If all suppliers are involved in the design phase of the parts they are making, the level of accountability goes up and different liabilities are introduced.
Companies will continue to outsource but they need to be involved beyond their tier one suppliers. Also liability has to be established and agreed upon. The company culture needs to be understood and respected, standards will need to be established and met. Communication needs to continue to flow up and down the supply chain, as they say; you are only as strong as your weakest link.
References 1. Consumer FAQ, accessed 25/03/2010,
http://pressroom.toyota.com/pr/tms/customer-faqs-regarding-the-sticking-153495.aspx 2. Deveau, S., 2010, Outsourcing effort rains on Toyota’s parade, accessed
21/03/2010, http://www.financialpost.com/story.html?id=2490307 3. Dodge, J., 2010, Toyota claims to have remedied “pedal entrapment” problem,
accessed 15/03/2010, http://www.smartplanet.com/technology/blog/thinking-tech/toyotaclaims-to-have-remedied-pedal-entrapment-problem/2902/ 4. Hannon, D., 2009, Shorter is better for Toyota’s supply chain, accessed
25/03/2010, http://hasanyorukoglu.com/blog/?tag=toyota-production 5. Healey, J.R., 2010, Toyota recall launches CTS out of obscurity, accessed
16/03/2010, http://www.usatoday.com/money/autos/2010-01-29-toyotacts29_CV_N.htm 6. Linebaugh, K. & Shirouzu, N., 2010, Toyota Halts Sales Over Safety Issue, accessed 20/03/2010,